Question

Question 1

a.

Calculate the expected return on stock of Gamma Inc.:

State of the economy | Probability of the states | Percentage returns |
---|---|---|

Economic recession | 28% | -7.4% |

Steady economic growth | 35% | 2.2% |

Boom | Please calculate it | 14.6% |

*Round the answers to two decimal places in percentage
form.*

*b.*

Calculate the expected standard deviation on stock:

State of the economy | Probability of the states | Percentage returns | |
---|---|---|---|

Economic recession | 18% | 2% | |

Steady economic growth | 22% | 8% | |

Boom | Please calculate it | 14% |

Answer #1

Question 1 (1 point)
a.
Calculate the expected return on stock of Gamma Inc.:
State of the economy
Probability of the states
Percentage returns
Economic recession
15%
-5.2%
Steady economic growth
30%
2.7%
Boom
Please calculate it
13.3%
Round the answers to two decimal places in percentage
form.
b.
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
26%
-10%
Steady economic growth
28%
10%
Boom
Please calculate it...

Calculate the expected return on stock Gamma Inc.:
State of the economy Probability of the States percentage
returns
Economic recession 14% -5.2%
Steady economic growth 44% 2.2%
Boom please calculate it 10.5%
Round answer to two decimal places in percentage form

Calculate the expected return on stock of Gamma Inc.:
State of the economy
Probability of the states
Percentage returns
Economic recession
18%
-5.0%
Steady economic growth
49%
5.3%
Boom
Please calculate it
9.7%

Question 2 (1 point)
Calculate the expected standard deviation on stock:
State of the economy
Probability of the states
Percentage returns
Economic recession
21%
2%
Steady economic growth
30%
9%
Boom
Please calculate it
11%
Round the answers to two decimal places in percentage
form

Calculate the expected standard deviation on stock:
State of the economy Probability of the states Percentage
returns
Economic recession 23% -5%
Steady economic growth 25% 10%
Boom Please calculate it 14%

What is the expected
return on this stock given the following information?
State of the
Economy
Probability
E(R)
Boom
0.4
15
%
Recession
0.6
-20
%
Multiple Choice
-8.07 percent
-6.00 percent
-5.20 percent
-5.70 percent
-7.69 percent
A portfolio consists
of the following securities. What is the portfolio weight of stock
A?
Stock
#Shares
PPS
A
200
$
48
B
100
$
33
C
250
$
21
Multiple Choice
0.389
0.451
0.336
0.529
0.445
What is the variance
of...

Use the following information on states of the economy and stock
returns to calculate the standard deviation of returns. (Do
not round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places.)
State of Economy
Probability of
State of Economy
Security
Return
if State Occurs
Recession
.35
−9.00
%
Normal
.30
14.00
Boom
.35
23.00
Standard Deviation: ?%

Consider the following
information:
Rate of Return if State Occurs
State of
Probability of
State
Economy
of
Economy
Stock A
Stock B
Recession
.23
.025
–.28
Normal
.58
.105
.18
Boom
.19
.170
.41
Requirement
1:
Calculate the expected return for the two stocks.
(Do not round intermediate calculations.
Enter your answers as a percentage rounded to 2
decimal places (e.g., 32.16).)
Expected
return
E(RA)
%
E(RB)
%
Requirement
2:
Calculate...

A.
Use the following information on states of the economy and stock
returns to calculate the expected return for Dingaling Telephone:
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places. Omit the "%" sign in your
response.)
State of
Economy
Probability of
State of Economy
Security Return
If State Occurs
Recession
.40
–5.50
%
Normal
.40
11.00
Boom
.20
17.00
B.
Use the following information on states of the economy and stock
returns...

KNF stock is quite cyclical. In a boom economy, the stock is
expected to return 34 percent in comparison to 13 percent in a
normal economy and a negative 22 percent in a recessionary period.
The probability of a recession is 15 percent while the chance of a
boom is 4 percent. What is the standard deviation of the returns
this stock?

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